Correlation Between Burford Capital and Barnes Noble

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Can any of the company-specific risk be diversified away by investing in both Burford Capital and Barnes Noble at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Burford Capital and Barnes Noble into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Burford Capital and Barnes Noble Education, you can compare the effects of market volatilities on Burford Capital and Barnes Noble and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Burford Capital with a short position of Barnes Noble. Check out your portfolio center. Please also check ongoing floating volatility patterns of Burford Capital and Barnes Noble.

Diversification Opportunities for Burford Capital and Barnes Noble

0.44
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Burford and Barnes is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Burford Capital and Barnes Noble Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barnes Noble Education and Burford Capital is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Burford Capital are associated (or correlated) with Barnes Noble. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barnes Noble Education has no effect on the direction of Burford Capital i.e., Burford Capital and Barnes Noble go up and down completely randomly.

Pair Corralation between Burford Capital and Barnes Noble

Considering the 90-day investment horizon Burford Capital is expected to generate 0.62 times more return on investment than Barnes Noble. However, Burford Capital is 1.61 times less risky than Barnes Noble. It trades about 0.19 of its potential returns per unit of risk. Barnes Noble Education is currently generating about -0.17 per unit of risk. If you would invest  827.00  in Burford Capital on September 5, 2022 and sell it today you would earn a total of  67.00  from holding Burford Capital or generate 8.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Burford Capital  vs.  Barnes Noble Education

 Performance (%) 
       Timeline  
Burford Capital 
Burford Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Burford Capital are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Burford Capital is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Burford Price Channel

Barnes Noble Education 
Barnes Performance
0 of 100
Over the last 90 days Barnes Noble Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Barnes Noble is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Barnes Price Channel

Burford Capital and Barnes Noble Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Burford Capital and Barnes Noble

The main advantage of trading using opposite Burford Capital and Barnes Noble positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Burford Capital position performs unexpectedly, Barnes Noble can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Barnes Noble will offset losses from the drop in Barnes Noble's long position.
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The idea behind Burford Capital and Barnes Noble Education pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center. Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.

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